Below is the statement issued by the U.S. Department of Justice, United States Attorney, Eastern District of Pennsylvania.

The Clinical Practices of the University of Pennsylvania (CPUP), a component of the University of Pennsylvania Health System (UPHS), has agreed to pay $30 million to the United states government after a federal audit disclosed that false Medicare bills were submitted for faculty physician services.

The civil settlement agreement was announced today (Dec. 12) by Michael R. Stiles, U.S. Attorney for the Eastern District of Pennsylvania, and June Gibbs Brown, Inspector General of the Department of Health and Human Services.

As part of the settlement, CPUP also agreed to undertake an extensive compliance/disclosure program to assure that future billings by its physicians comply with Medicare requirements.

"The submission of these false claims to Medicare is a very serious matter," Stiles said. "Obviously, the escalating costs of Medicare are a concern to everyone. Hopefully, this agreement will serve notice on other institutions to closely audit and monitor their Medicare billings, and to come forward if they find discrepancies. We intend to continue to aggressively pursue investigations of false Medicare claims submitted by other institutions."

Federal law provides for triple damages in false claims cases. Triple damages of $30 million in this case covers false claims for the years 1989-1994.

The audit disclosed:

Billing by faculty physicians for services actually performed by resident physicians in training. Under the Medicare program, the United States already pays for a substantial portion of the residents' training and salaries, and their services cannot be billed to the Medicare program on a fee-for-service basis. Certain physicians' bills represented that they had personally provided the service done by the residents.

Billing by faculty physicians for in-patient consultations at the highest levels of the coding system, without reference to the services actually performed.

Inadequate documentation for many different types of bills submitted.

Auditors used a scientific sampling of CPUP billings to arrive at the amount of false claims. Individual medical charts were analyzed by experts from XACT Medicare Services, a subsidiary of Pennsylvania Blue Shield.

The compliance program agreed to has four key elements:

CPUP will centralize all business and financial functions under the direction of its Chief Financial Officer. This means that all professional fee services will be billed out of a central office, instead of by individual physicians or departments using differing standards and policies.

Over the next five years, CPUP will put into place separate internal monitoring and external auditing procedures.

CPUP will continue for the next five years mandatory education and training for all physicians and billing personnel that began in 1994.

CPUP will install two telephone lines dedicated to providing billing education as well as the reporting of improper billing for use by physicians, staff and billing personnel.

The $30 million CPUP will pay will be distributed between the Medicare Trust Fund and the U.S. Treasury.

Stiles said this matter had been assigned to Assistant United States Attorney Margaret Hutchinson and congratulated Hutchinson and Jim Sheehan, Chief of the U.S. Attorney's Office, Civil Division, for their excellent efforts in the case.

Stiles also noted the cooperation of the University of Pennsylvania Health Services in the prompt resolution of the settlement agreement.